This article is from the source 'bbc' and was first published or seen on . The next check for changes will be
You can find the current article at its original source at https://www.bbc.co.uk/news/business-12196322#8
The article has changed 16 times. There is an RSS feed of changes available.
| Version 12 | Version 13 |
|---|---|
| UK inflation rate: How quickly are prices rising? | UK inflation rate: How quickly are prices rising? |
| (1 day later) | |
| Prices in the UK rose 2.2% in the 12 months to July, up from 2% for June. | |
| The Bank of England has a target to keep inflation at 2%. | |
| What does inflation mean? | What does inflation mean? |
| Inflation is the increase in the price of something over time. | Inflation is the increase in the price of something over time. |
| For example, if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%. | For example, if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%. |
| How is the UK's inflation rate measured? | How is the UK's inflation rate measured? |
| The prices of hundreds of everyday items, including food and fuel, are tracked by the Office for National Statistics (ONS). | The prices of hundreds of everyday items, including food and fuel, are tracked by the Office for National Statistics (ONS). |
| This virtual "basket of goods" is regularly updated to reflect shopping trends, with vinyl records and air fryers added in 2024, and hand sanitiser removed. | This virtual "basket of goods" is regularly updated to reflect shopping trends, with vinyl records and air fryers added in 2024, and hand sanitiser removed. |
| The ONS monitors price changes over the previous 12 months to calculate inflation. | The ONS monitors price changes over the previous 12 months to calculate inflation. |
| The main inflation measure is called the Consumer Prices Index (CPI), external. | The main inflation measure is called the Consumer Prices Index (CPI), external. |
| The latest figures show that CPI rose by 2.2% in the year to July, largely due to prices of gas and electricity falling by less than they did a year before. | The latest figures show that CPI rose by 2.2% in the year to July, largely due to prices of gas and electricity falling by less than they did a year before. |
| Why are prices still rising? | Why are prices still rising? |
| Inflation has fallen significantly since it hit 11.1% in October 2022, which was the highest rate for 40 years. | Inflation has fallen significantly since it hit 11.1% in October 2022, which was the highest rate for 40 years. |
| However, that doesn't mean prices are falling - just that they are rising less quickly. | However, that doesn't mean prices are falling - just that they are rising less quickly. |
| Inflation soared in 2022 because oil and gas were in greater demand after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine. | Inflation soared in 2022 because oil and gas were in greater demand after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine. |
| It then remained above the Bank of England's 2% target partly because of high food prices. | It then remained above the Bank of England's 2% target partly because of high food prices. |
| Although these have now dropped back, some parts of the economy, like the services sector - which includes everything from restaurants to hairdressers - are still seeing more significant price rises. | Although these have now dropped back, some parts of the economy, like the services sector - which includes everything from restaurants to hairdressers - are still seeing more significant price rises. |
| Worker shortages have also made it more expensive to find and keep staff., external | Worker shortages have also made it more expensive to find and keep staff., external |
| Why inflation is worse for some people than others | Why inflation is worse for some people than others |
| Why inflation is worse for some people than others | Why inflation is worse for some people than others |
| How much are prices rising for you? Try our calculator | How much are prices rising for you? Try our calculator |
| How much are prices rising for you? Try our calculator | How much are prices rising for you? Try our calculator |
| Why does putting up interest rates help to lower inflation? | Why does putting up interest rates help to lower inflation? |
| The Bank of England uses interest rates to try and keep inflation at 2%. | The Bank of England uses interest rates to try and keep inflation at 2%. |
| When inflation was well above that target, it increased interest rates to 5.25%, a 16-year high. | When inflation was well above that target, it increased interest rates to 5.25%, a 16-year high. |
| The idea is that if you make borrowing more expensive, people have less money to spend. People may also be encouraged to save more. | The idea is that if you make borrowing more expensive, people have less money to spend. People may also be encouraged to save more. |
| In turn, this reduces demand for goods and slows price rises. | In turn, this reduces demand for goods and slows price rises. |
| But it is a balancing act - increasing borrowing costs risks harming the economy. | But it is a balancing act - increasing borrowing costs risks harming the economy. |
| For example, homeowners face higher mortgage repayments, which can outweigh better savings deals. | For example, homeowners face higher mortgage repayments, which can outweigh better savings deals. |
| Businesses also borrow less, making them less likely to create jobs. Some may cut staff and reduce investment. | Businesses also borrow less, making them less likely to create jobs. Some may cut staff and reduce investment. |
| What is happening to UK interest rates? | |
| In August, the Bank of England cut rates to 5%. | |
| However, Bank of England Governor Andrew Bailey warned: "We need to make sure inflation stays low and be careful not to cut interest rates too quickly or by too much." | |
| Although the headline CPI figure is close to the 2% target, the Bank also considers other measures of inflation, external, such as "core inflation", when deciding how to change rates. | |
| Core inflation doesn't include food or energy prices because they tend to be very volatile, but it was 3.3% in July - down from 3.5% in June, which suggests price rises are still an issue. | Core inflation doesn't include food or energy prices because they tend to be very volatile, but it was 3.3% in July - down from 3.5% in June, which suggests price rises are still an issue. |
| In its latest forecast for the global economy, the International Monetary Fund (IMF) warned that persistent inflation in countries including the UK and US might mean interest rates have to stay "higher for even longer". | In its latest forecast for the global economy, the International Monetary Fund (IMF) warned that persistent inflation in countries including the UK and US might mean interest rates have to stay "higher for even longer". |
| What are UK interest rates and when will they fall? | What are UK interest rates and when will they fall? |
| What are UK interest rates and when will they fall? | What are UK interest rates and when will they fall? |
| What a falling inflation rate means for your finances | What a falling inflation rate means for your finances |
| What a falling inflation rate means for your finances | What a falling inflation rate means for your finances |
| Are wages keeping up with inflation? | Are wages keeping up with inflation? |
| The latest official figures, external show that wages are increasing more slowly than they were around two years ago, but are still rising faster than inflation. | The latest official figures, external show that wages are increasing more slowly than they were around two years ago, but are still rising faster than inflation. |
| Average growth in pay (excluding bonuses) during the three-month period between April and June 2024 was 5.4%. | Average growth in pay (excluding bonuses) during the three-month period between April and June 2024 was 5.4%. |
| Five tips when asking for a pay rise | Five tips when asking for a pay rise |
| Five tips when asking for a pay rise | Five tips when asking for a pay rise |
| How to get a job: Six expert tips for finding work | How to get a job: Six expert tips for finding work |
| How to get a job: Six expert tips for finding work | How to get a job: Six expert tips for finding work |
| Who are the millions of Britons not working? | Who are the millions of Britons not working? |
| Who are the millions of Britons not working? | Who are the millions of Britons not working? |
| What is happening to inflation and interest rates in Europe and the US? | What is happening to inflation and interest rates in Europe and the US? |
| Many other countries have also seen inflation and higher interest rates. | Many other countries have also seen inflation and higher interest rates. |
| At 2.2%, UK inflation is below the rate for countries using the euro, which was 2.5% in June, down from 2.6% in May. | At 2.2%, UK inflation is below the rate for countries using the euro, which was 2.5% in June, down from 2.6% in May. |
| Despite the slight rise in inflation, in June the European Central Bank (ECB) cut its main interest rate from an all-time high of 4% to 3.75%, the first drop in five years. | Despite the slight rise in inflation, in June the European Central Bank (ECB) cut its main interest rate from an all-time high of 4% to 3.75%, the first drop in five years. |
| In the 12 months to June, US inflation dropped to 3%, down from 3.3% in the year to May. | In the 12 months to June, US inflation dropped to 3%, down from 3.3% in the year to May. |
| But at its June meeting the US central bank kept its key interest rates at between 5.25% and 5.5% - unchanged since July 2023. | |
| Related Topics | Related Topics |
| Economics | Economics |
| Personal finance | Personal finance |
| Inflation | Inflation |
| Cost of Living | Cost of Living |
| UK economy | UK economy |
| Bank of England | Bank of England |
| Pay | Pay |